Posts Categorized: BBA Amicus Briefs

In a case with significant ramifications for trusts and estates practitioners and the clients they serve, the Boston Bar Association today filed an amicus brief urging the Supreme Judicial Court (SJC) to recognize that the power of a trustee to distribute trust property to beneficiaries also includes the power to distribute that property to another trust for the benefit of the beneficiary under Massachusetts law. The case before the court, Richard Morse, Trustee v. Jonathan A. Kraft, et al. was brought as a non-adversarial proceeding by a trustee of a trust for the purpose of having the SJC answer the question: Does a trustee have the power to make distributions in further trust for any beneficiary’s benefit without the consent or approval of any beneficiary or court?

In its amicus brief the BBA makes the case that a trustee’s broad discretion to distribute property outright to a beneficiary includes the authority to distribute property to a new trust for the benefit of the same beneficiary, subject to fiduciary limitations based upon the nature and purposes of the trust and the beneficiary’s best interests.

The BBA’s amicus brief was drafted by a committee formed by the Trusts and Estates Section and comprised of the following individuals:

The Boston Bar Association is a non-profit, voluntary membership organization of 10,000 attorneys drawn from private practice, corporations, government agencies, legal aid organizations, the courts, and law schools. It traces its origins to meetings convened by John Adams, the lawyer who provided pro bono representation to the British soldiers prosecuted for the Boston Massacre and went on to become the second president of the United States.

Chapter 524 has created uncertainty in the law of trusts and estates and has compromised the ability of parties to rely on the law in place at a given time in preparing estate plans, making distributions from trusts, and advising clients with regard to trust administration — Boston Bar Association Amicus Brief Filed on April 30, 2012

Picture this estate planning nightmare now playing out in Massachusetts:

Mr. Smith established a trust to care for his daughter, Mary. Mary, in turn, had one biological daughter and one adopted daughter. Under the law as it stood when Mr. Smith set up his trust, only Mary’s biological daughter would be a beneficiary of Grandpa’s trust. That was before 1958, when the term “issue” was used to refer only to biological children.

Long after her father died, Mary turned to an attorney for guidance on how best to compensate for this inequitable situation. She drafted a will leaving her entire estate to her adopted daughter, and nothing to her biological daughter, because her biological daughter would automatically receive an equally generous sum from Mr. Smith’s trust.

In 1958, an enlightened Massachusetts Legislature broadened the definition of “issue” to include adopted children as well as biological children. This legislation was not retroactive, however, and Mary was therefore correctly advised that both of her daughters were still provided for equally. Mary later died, secure in the belief that she had arranged for a fair and equal allocation of the family assets between her two daughters.

Fast forward to 2008. The Massachusetts Legislature now passes Chapter 524 of the Acts of 2008 — amending the definition of “issue” to include adopted children in pre-1958 trusts. What few people realize at the time is that this new law also changes the property rights attached to that definition.

Thanks to Chapter 524, Mary’s adopted daughter now has a windfall, receiving the benefits of her mother’s entire estate and also a one half interest in Grandpa Smith’s trust, which had previously belonged to her sister alone. This is not the outcome Mary intended when she drafted her will.

In a case with similar facts now pending before the Massachusetts Supreme Judicial Court, Rachel A. Bird Anderson v. BNY Mellon, N.A., et al., SJC-11122, the Boston Bar Association has filed an amicus brief urging the Court to clarify estate planning law as it relates to Chapter 524.

As the brief notes, “Families often rely on [established principles of construction] in making irrevocable alternate arrangements, such as gifts or bequests made in favor of adopted children who were (until the effective date of Chapter 524) not beneficiaries of certain family trusts.”

The BBA amicus brief urges the SJC to provide answers to two important questions:

Is the retroactive application of Chapter 524 to instruments executed prior to 1958 constitutional?

If so, what are the consequences for actions taken by fiduciaries in reliance on Chapter 524 prior to the SJC’s determination that such an application is constitutional?

The answers to both questions are of substantial importance to those concerned with matters of estate planning and trust administration within the Commonwealth.

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